Page 84 - DCAP307_PLANNING_AND_MANAGING_IT_INFRASTRUCTURE

Planning and Managing IT Infrastructure

Notes  Off-shore outsourcing is the practice of hiring organisations or employees to perform
company tasks overseas.

 Organisations decide to outsource for many reasons. Three of the most frequently cited
reasons are to cut or stabilize costs, improve the firm’s focus on core operations, and
upgrade the firm’s capabilities and services.

 While companies can gain many potential benefits from outsourcing, these gains do not
come without potential problems. Four areas of risk include quality problems, exposure
to legal liabilities, negative impact on business partner and customer relationships and
satisfaction, and potential data and security breaches.

 Outsourcing is like any other business initiative: it takes planning, knowledge, and skill
to execute well.
 Firms that consider establishing offshore outsourcing agreements must be aware that
major differences between outsourcing and offshore outsourcing must be taken into account.

4.7 Keywords

BPO: Business process outsourcing (BPO) is the contracting of a specific business task, such as
payroll, to a third-party service provider.

Data: Data is information that has been translated into a form that is more convenient to move
or process.
GSP: Outsourcing firms that can provide these services are referred to as global service providers
(GSP).
ITO: Information technology outsourcing or ITO is a company’s outsourcing of computer or
Internet related work to other companies.
Off source outsourcing: Offshore outsourcing is the practice of hiring organisations or employees
to perform company tasks overseas.
Outsourcing: Outsourcing is an arrangement in which one company contracts with another
organisation to provide services that could be provided by company employees.

Service Provider: A service provider is any organisation that provides goods, facilities or services
to the public, whether paid for or free, no matter how large or small the organisation is.
Software: Organised information in the form of operating systems, utilities, programs, and
applications that enable computers to work.

4.8 Review Questions

1. What is outsourcing? Explain the concept of outsourcing with example.
2. Make distinction between outsourcing and offshore outsourcing.

3. Describe the reasons why organisations turn to outsourcing.
4. What are the different types of outsourcing? Discuss.
5. Can a firm be successful without outsourcing? Discuss the question fully and identify an
example to support your position.
6. Discuss the key issues associated with outsourcing.
7. Explain the concept of Planning Outsourcing Process. Give examples.

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